Required information The following information applies to the questions displaye

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Required information The following information applies to the questions displayed below. Hudson Co. reports the contribution margin income statement for 2017. HUDSON CO Contribution Margin Income Statement For Year Ended December 31, 2017 Sales (9,600 units at $225 each) Variable costs (9,600 units at $180 each) Contribution margin Fixed costs Pretax income $2,160,000 1,728,000 S 432,000 324,000 $ 108,000 If the company raises its selling price to $240 per unit. 1. Compute Hudson Co.'s contribution margin per unit. 2. Compute Hudson Co.'s contribution margin ratio 3. Compute Hudson Co's break-even point in units 4. Compute Hudson Co.'s break-even point in sales dollars 1. Contribution margin 2. Contribution margin ratio 3. Break-even point 4. Break-even sales dollars per unit units

Explanation / Answer

Contribution margin=Sales-Variable costs.

1.Contribution margin=(240-180)=$60 per unit.

2.Contribution margin ratio=Contribution margin/Sales

=(60/240)=25%

3.Breakeven point=Fixed cost/Contribution margin

=(324000/60)=5400 units.

4.Breakeven value=(5400*240)=$1,296,000.

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